‘They fulfilled their end of the bargain’
Bankrupt animation studio off the hook for $23M Ontario job-creation grant
A Toronto movie and TV animation company that abruptly closed this week — leaving more than 500 jobless — won’t have to repay a $23million Ontario government grant it got in a splashy photo op with Sir Elton John in 2009.
Arc Productions had long ago met job-creation obligations in the deal, Economic Development Minister Brad Duguid said Friday, defending programs that dole out taxpayer money to help businesses expand.
“They fulfilled their end of the bargain,” he told reporters at Queen’s Park after Statistics Canada reported the province lost 36,000 jobs in July as the provincial unemployment rate held steady at 6.4 per cent.
“You can’t hold a company responsible to operate forever because they’re operating in the real world.”
Progressive Conservative MPP Monte McNaughton said the company’s failure is why he’s been press- ing the government for six monthsto release a comprehensive list of government handouts to corporations and details on how many jobs were created.
“The government needs to come clean . . . so all taxpayers can see whether they’re getting value for money,” said McNaughton, who has called the money “crony capitalism” with no transparent guidelines, targets or measurement of results.
In her annual report last December, Auditor General Bonnie Lysyk flagged $1.45 billion in business assistance funding since 2004, with 80 per cent awarded in a secret process by invitation only to certain companies, raising questions about why they were chosen. She found some companies got funding “despite evidence they would have proceeded without government help.”
Duguid said the government has given $2.8 billion in “business support” to companies over the last decade, brought in $28 billion of private sector investment and 160,000 net new jobs. “It’s a point of pride for us.” Arc, one of the country’s largest ani- mation studios, locked out staff Tuesday citing a cash crunch that prompted its principal lender to seek a court-appointed receiver to take possession. Staff were owed wages.
Under the 2009 agreement, the company then known as Starz Animation was to create about 200 jobs over five years, Duguid said, insisting such grants helped make Ontario a hotbed for the digital animation industry.
The $23-million deal under the government’s “Next Generation” jobs fund was announced by thenpremier Dalton McGuinty with Sir Elton John, who had hired Starz to produce the Shakespearean drama spoof Gnomeo and Juliet for his film company, Rocket Pictures.
Duguid said the government will release the list of grants, companies and results requested by McNaughton “very soon,” after it has been vetted to ensure sensitive commercial information is not accidentally released.
“I don’t buy this,” said McNaughton, who accused the government of stonewalling and has previously raised concerns about companies getting grants and subsequently donating to the Liberal Party of Ontario.
Given that Ontario’s digital animation industry is growing at a rate of 20 per cent annually, with three new companies expected to announce investments soon, Duguid said he expects the Arc staff will find new jobs.
“One of the reasons why we’re a leader is because we’ve made these business support investments with companies like Arc, with companies like Ubisoft as well, that have become an anchor . . . for talent in this sector.”
Duguid said money in corporate grant programs is meted out as job targets are met and that 88 per cent of companies meet their obligations.
The other 12 per cent “weren’t able to expand the way they wanted to and then they just didn’t fulfill their obligation, but didn’t get money,” he added.